Good weather during all year, excellent gastronomy, luxury shops and glamourous style of life.
Many people are attracted by these elements that characterise the vibrant area of Marbella, including Sotogrande and Estepona.
Please see key legal issues that a prospective buyer should consider when buying real estate in Spain:
1. Check the urban planning situation of the property. The region of Marbella has been subject to some legal issues regarding the planning permissions granted by local authorities. In practical terms, it means that there are some developments and buildings where there is no building license or first occupation licenses. It must be checked the reason behind the licenses were not granted.
2. If you are buying off plan, you must request the developer to produce a Certificate from the Spanish equivalent to Companies House, confirming that the company is trading, details of the directors. You must also check that there are not bankruptcy proceedings against the developer. It is essential that the developer provides you with bank guarantees for any amounts that you are paying into the developer’s account.
3. If the property is already built, you should request the vendor to produce the local rates receipts of the last 4 years Depending on the type of property, you should also request from the management company a certificate that there are no outstanding service charges. It is also good practice to request minutes of the last AGM to ascertain if works will be carried out in communal areas that may increase the service charges.
4. Whilst there is no specific regulation in Spain on how to buy a property, it is common practice once the parties decide to go ahead, that an initial deposit contract is signed to take the property off the market and a small deposit is paid, this is usually a nominal amount paid. Once checks are being made and the parties are happy to proceed, a private purchase contract is signed, it is standard practice to pay 10% of the purchase price as deposit. Completion takes place before the notary when the parties or their legal representatives execute a Deed of Purchase/Sale.
5. The Due Diligence ideally should be carried out before the exchange of contracts or at the very least before the signature of the Deed of Sale/Purchase. If the due diligence cannot be completed before exchanging contracts, then it will be more difficult to abort the transaction without penalties in case there are any issues with the property. In this case, the drafting of the contract will be key. The due diligence amongst other involves checking the legal ownership of the property, enquiries with the local authorities in relation to urban planning infringements, whether there are charges or encumbrances on the property.
6. We strongly recommend instructing a surveyor to check the structural situation of the property. It is also advisable to include a clause on the purchase contract that completion will be subject to the lack of defects or major damages on the property. This will be key if the survey cannot be made before exchange of contracts.
7. If the property is in a development, you must contact the management company to check restrictions agreed by the community of owners, like the prohibition of seasonal and short lettings, or prohibition of pets in the communal areas. This is of essence if you were thinking of acquiring a buy to let.
8. When you are buying a new development, this means that you are buying directly from the developer, you must pay VAT, and stamp duty. If you are buying a property that is not brand new, you will pay transfer tax. In addition to taxes, you will pay notary and land registry fees.
9. If you need a mortgage, you must check with the lender in Spain the lending facility as Spanish lenders have restrictions in terms of the amounts they can lend to non residents. Also, in the private purchase contract you must include a stipulation that protects you in the case that the mortgage is not granted for financing the purchase.
10. It is not compulsory to be represented by a lawyer in Spain, however, it is always advisable, due to the legal differences between both countries.
